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UK wagering companies gamble on US after sports betting wager ruling
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5 June 2018

By Natalie Sherman

Business reporter, New York

It's high stakes for UK companies as sports betting starts to spread in America.

From Tuesday, brand-new guidelines on sports betting entered into effect in Delaware, a tiny east coast state about two hours from Washington.
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Neighbouring New Jersey could begin accepting sports betting bets as early as Friday.

The changes are the first in what might become a wave of legalisation after the Supreme Court last month cleared the way for states to permit sports betting.

The industry sees a "when in a generation" opportunity to establish a brand-new market in sports betting-mad America, stated Dublin-based monetary analyst David Jennings, who heads leisure research study at Davy.

For UK firms, which are facing consolidation, increased online competition and harder rules from UK regulators, the timing is particularly suitable.

Why the gaming market faces an unpredictable future

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But the market states counting on the US stays a risky bet, as UK business deal with complicated state-by-state guideline and competition from established local interests.

"It's something that we're truly concentrating on, but equally we do not want to overhype it," stated James Midmer, representative at Paddy Power Betfair, which just recently purchased the US fantasy sports betting website FanDuel.

'Take some time'

The US accounted for about 23% of the world's $244bn (₤ 182bn) in gaming revenue in 2015, according to a report by Technavio, external released in January.

Firms are wanting to take advantage of more of that activity after last month's decision, which overruled a 1992 federal law that barred states beyond Nevada and a couple of others from authorising sports betting wagering.

The judgment found the law was an over-reach of federal power. But the court it did not in fact legalise sports betting, leaving that concern to local lawmakers.

That is expected to lead to considerable variation in how firms get accredited, where sports betting wagering can take place, and which occasions are open to speculation - with huge ramifications for the size of the market.

Potential income ranges from $4.2 bn to almost $20bn every year depending upon elements like the number of states move to legalise, Oxford Economics approximated in a 2017 research study for the American Gaming Association.

"There was a lot of 'this is going to be substantial'", said Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he stated: "I believe many people ... are looking at this as, 'it's an opportunity however it's not going to be $20bn and it's going to be state by state and it's going to require time'."

'Remains to be seen"

Chris Grove, managing director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting in some kind by 2023, developing a market with about $6bn in annual revenue.

But bookies deal with a far different landscape in America than they carry out in the UK, where sports betting shops are a regular sight.

US laws restricted gaming largely to Native American lands and Nevada's Las Vegas strip until relatively recently.

In the popular imagination, sports betting wagering has actually long been connected to a 1919 baseball World Series match-fixing scandal.

States have also been slow to legalise lots of kinds of online gaming, despite a 2011 Justice Department opinion that appeared to eliminate challenges.

While sports betting is generally seen in its own classification, "it clearly remains to be seen whether it gets the sort of momentum people believe it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting guideline.

David Carruthers is the previous president of BetonSports, who was apprehended in the US in 2006 for running an offshore online sportsbook and served prison time.

Now a specialist, he says UK companies need to approach the market thoroughly, picking partners with caution and preventing bad moves that might cause regulator backlash.

"This is a chance for the American sports betting ... I'm unsure whether it is a chance for company," he says. "It really depends on the result of [state] legislation and how business operators pursue the chance."

'It will be partnerships'

As legalisation starts, sports betting companies are lobbying to fend off high tax rates, as well as requests by US sports betting leagues, which wish to collect a portion of income as an "integrity cost".

International business deal with the included obstacle of a powerful existing video gaming industry, with casino operators, state-run lottos and Native American tribes that are seeking to protect their grass.

Analysts say UK companies will need to strike partnerships, providing their expertise and technology in order to make inroads.

They indicate SBTech's current statement that it is supplying innovation for Kentucky Derby operator Churchill Downs as an example of the kind of deals most likely to materialise.

"It will be a win-win for everyone, but it will be partnerships and it will be driven by technology," Mr Hawkley stated.

'It will just depend'

Joe Asher, chief executive at William Hill US, is clear-eyed about the truths.

The business has been purchasing the US market because 2011, when it acquired 3 US companies to develop a presence in Nevada.

William Hill now utilizes about 450 individuals in the US and has actually revealed partnerships with gambling establishments in Iowa and New Jersey.

It works as danger supervisor for the Delaware Lottery and has invested millions along with a local designer in a New Jersey horse racing track.

Mr Asher stated William Hill has ended up being a household name in Nevada however that's not always the objective all over.

"We definitely plan to have a really considerable brand presence in New Jersey," he said. "In other states, it will just depend on regulation and possibly who our local partner is."

"The US is going to be the most significant sports betting market on the planet," he included. "Obviously that's not going to occur on day one."

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